Promotion Rules and Skill Acquisition

An Experimental Study

Bibliographic Data

ID9724719
AuthorsHessel Oosterbeek (0000-0001-7078-9957, Tinbergen Institute), Randolph Sloof (0000-0002-8113-1269, Tinbergen Institute), Joep Sonnemans (0000-0001-7545-7409, Tinbergen Institute)
Year2007
Volume74
Issue294
Pages259-297
Publication date2007-05-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/j.1468-0335.2006.00537.x
OpenAlexW2120963440
LanguageEN
References cited16

Standard economic theory identifies a trade‐off between up‐or‐stay and up‐or‐out promotion rules. Up‐or‐stay never wastes the skills of those not promoted but may provide insufficient incentives to invest in skills. Up‐or‐out can always induce investment in skill acquisition but may waste the skills of those not promoted. The paper reports an experiment designed to study this trade‐off. Under up‐or‐out, parties behave almost exactly as theory predicts. But under up‐or‐stay (and stay‐or‐stay), results differ markedly from theoretical predictions. In that case workers invest rather frequently, although the prediction is that they would not. These deviations can be explained by various reciprocity mechanisms

Business · Dreyfus model of skill acquisition · Economic growth · Economics · Incentive · Investment (military) · Microeconomics · Political science · Promotion (chess) · Reciprocity (cultural anthropology) · Economic Policies and Impacts · Experimental Behavioral Economics Studies · Law, Economics, and Judicial Systems · Psychology · Social Psychology

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